5 Reasons the Video Game Industry Is About to Crash

No one loves naysaying more than gamers: Everything that happens is the "worst ever" or the "beginning of the end" of a series. Well, I'm here to tell you that those people might be more right than anyone realizes.

I've worked on a few MMOs, as a programmer, game designer, lead systems designer, lead designer, and producer. My work hasn't won Game of the Year, but I've been around the block, and I can't help but notice that these days you can't browse a game forum without reading serious laments about the state of the industry and the occasional comparison to the video game crash of 1983 -- a collapse driven by a glut of indistinguishable games and an economic model that had stopped working long before anyone woke up and realized it.

So are we headed for another crash? Short answer, yes. Long answer? Yes, because ...

(Speaking of "crash", did you know science can't explain how bicycles work? Read more in Cracked's De-Textbook.)

#5. We Put People Who Don't Know Gaming in Charge

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Not to stereotype here, but the type of person who knows how to make an awesome video game about fighting dragons with a giant chainsaw tends not to be the same type of person who is an expert in business and finance. So if you look at the CEOs and executives of game studios today, you won't find many that actually have professional experience working as game designers. And that would be fine, except for the fact that, due to the way games are made, these guys wind up making the creative decisions. It's similar to the problem with big movie studios, only much worse.

Creatas Images/Creatas/Getty Images"... looking to Figure 3.11, we see profits increase by .054 percent for every bottle of Diet Coke on screen."

The result is that the gaming industry is driven by aphorisms. For example, it's an entrenched belief that the only truly successful games are branded titles, sequels, and reboots -- that's what the reports tell them. So what I found was that there was kind of a self-fulfilling prophecy at work. I was once told point-blank by a non-gamer CEO that "there's no market for sci-fi games" in a certain genre -- at the time, fantasy games dominated that market. And who's to say he was wrong? When has switching from fantasy to sci-fi ever worked out?

It's not that they know nothing about games; it's that they know just enough to be wrong. Ever go to a game forum and notice how every player thinks he's better than the designers? That combat would be perfectly balanced if the developers would just change that +2 to a +3 for his class? Now imagine that those people are running the business, and you have a pretty good idea of what the problem is -- creating a perfect game looks easy from the outside, in the same way that from the outside it seems like it'd be really easy to make a snake. And those outsiders are in charge.

So why not just have the money folks focus on the business end of game design and let the actual designers do the designing? Well, it turns out "the business end" includes deciding how many hours of content are in the game, whether you have linear progression with lots of levels, how the DLC is going to work, whether powerful items get sold in the cash shop, whether the game is a first-person gritty realistic shooter with RPG elements or an action RPG with gritty realism and lots of guns ... basically, everything that matters. The people who have the most experience and actually know what they're doing are basically just polishing the ideas that the execs come up with.

We don't like it any more than you do. I can tell you that professional game developers are some of the most hardcore gamers you'll find, but for the most part, they're just not allowed to work on the kind of games that interest them (I consider myself lucky to have dodged the bullet and gotten to work on a licensed property that I deeply loved). And while a professional developer will instinctively know -- and I'm just pulling stuff out of my ass here -- that it's awful to require an online connection to play a single-player game or it's asinine to have pre-order DLC before the game's console is even out, the execs will think those are great for the bottom line, and they make the rules.

"Historically, the best thing about SimCity games is the Internet."

And it's only getting worse, because ...

#4. Budgets Have Gone Insane, and That's Making Innovation Almost Impossible

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Nobody feels sorry for corporations, so when you hear EA or Activision groaning about how games cost too much to make, it feels like the consumers won. "That's right, now put it on a gold-plated disc and do a little dance while you're handing it to us, Mr. Blizzard!" But these budgets are, unquestionably, making games worse.

Let's say you've been put in charge of planning a child's birthday party, for some reason -- maybe you lost a bet or something. You've got one day to plan, a $50 budget, and five people to help you. Not a big deal, right? Put some balloons in the yard and hire a clown. Done. But what if that party was for a rich kid and your budget was $50 million? Do you think that makes it easier or harder? Let's put it this way: Instead of five friends helping you, it's 500 strangers, and all of them have different ideas about what a party should look like. How long until you see your first fistfight break out? How far into the party before you hear yourself scream, "OK, who hired the stripper?!?"

Well, in the world of game development, this change from small-scale projects to massive productions happened overnight -- the average game costs freaking 30 times as much as it did in the days of the original Sony PlayStation. Back then, the average game could be made for $800,000 on the low end, but by the PlayStation 3 era, the number had ballooned to $28 million. With the new consoles, that's going to go up again. At this point, it'd be cheaper to just create real zombies to chase people around.

In the older, simpler days (way back in the 1990s), you probably had a core team of a dozen developers and one or two vision holders who could keep the entire design in their heads. The producer had about nine months of planning until launch. Fast forward to today: Star Wars: The Old Republic cost upward of $500 million. Games require massive teams (some of them in another country) and years of development, and that's not including the umpteen false starts during preproduction. And this change happened too fast for studios to adapt -- they've refused to change with the times and are still operating with the same basic structure.

Not that it's any easier on their end. Remember, it not just the development that's changing so fast, it's distribution as well -- today, studios are competing in a market that's permanently saturated by $3 indie games on Steam and the nostalgia-driven GoG.com. Time-honored marketing strategies don't work anymore, and the industry is struggling to find a replacement. Even though it feels like prices have gone up, if you take inflation into account, right now games are the cheapest they've ever been. Add it all up, and most studios are one failed game away from bankruptcy.

BananaStock/BananaStock/Getty ImagesIf you find the buying habits of frat boys depressing now, try working for EA.

So from the gamers' end, it's easy to complain that the market is saturated with first-person shooters (the new consoles are picking up that banner with Killzone: Shadow Fall, Titanfall, and Destiny, in addition to the uninterrupted stream of Call of Duty and Battlefield games), but the fact is that the market is utterly reliant on those games' sales. The consistent success of go-to franchises like Madden NFL is probably the only thing separating the current industry from a 1983-style crash right now. It's not that they're playing it safe by going back to the same well again and again -- they're doing the only thing that will let them survive.

#3. Publishers Are Gaming the Review System

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Raise your hand if you've paid $60 for a heavily promoted game that got near-perfect review scores, only to find it to be a frustrating, cookie-cutter mess that had you doing a mental inventory of all of the things you could have bought with the cash instead ("three remote control flying sharks!). Do the critics, like, get a different version or something?

"It's a triumph!"

No, the system is set up so that big games rarely get the scores they deserve.

This is a huge problem from the consumer end -- games are a much bigger time and money investment than movies, books, or any other media, so having honest reviewers you can rely on is crucial. You're trying to get an opinion on what might be the only game you buy for the next couple of months, but it's becoming increasingly apparent that critic scores and user scores just don't sync up. Call of Duty: Ghosts currently has a score of 74 on Metacritic -- not a fantastic score for a AAA game with that kind of budget, but check out the average user score: 2.3.*

*Metacritic uses a 100 scale for critic reviews but a 10 scale for users.

Is that just a bunch of young gamers throwing a tantrum because they thought the game would have actual ghosts in it? Well, read the reviews -- the critics' write-ups boil down to "It's a recycled version of the old games, but still good," while the users' consensus is "$60 is a lot to pay for recycled material, guys." You can see that same divide with lots of games -- Total War: Rome II had a respectable 83.5 score at launch (currently down to 76), but the user reviews? 3.9/10. Mass Effect 3 is at 89 for critics vs. 5.0 for users, the latter group being way less forgiving of an ending that rendered every previous choice in the franchise meaningless.

So why do the critic scores skew so much higher? Well, behind the scenes, studios are doing everything they can to obtain the highest Metacritic score possible at launch -- some teams even get bonuses for hitting Metacritic targets. From the publication's standpoint, those reviews exist to bring website traffic. That traffic turns into revenue from advertisements ... that were purchased by the studios whose games are getting reviewed.

This is officially a black hole of journalism.

If you give the game an award or especially high praise, the publication could appear on that game's box -- the reviewers aren't paid, but they get valuable exposure. Basically, the publishing companies are paying the review site's bills by buying ads and handing out free publicity, so from the struggling writer's perspective, it's bad business to give bad reviews.

They use that word, but we don't think they know what it means.

And there is a very close interaction between the game journalists and the game makers' PR guys. So with a few exceptions, most major game previews go like this:

Journalists are invited to the studio or a rented room at a convention. They play the most polished level and/or segment of the game for a couple hours, maybe over the course of a few days. Drinks and meals are on the house. Keep in mind that they're getting dropped into the middle of the game somewhere, because complicated gameplay that builds on lessons learned in previous levels would be extremely frustrating, whereas you want the journalists to experience fun and excitement. So we're talking graphics, simple combat, flashy cinematics, and controlled linear environments that look really good -- as long as the journalists never stray from the path, which is why there are marketing execs looking right over their shoulders and telling them where to go. And it's amazing how intuitive level design becomes when the guy who designed the level is there to explain it.

Albert L. Ortega / Getty
"Ahh, now I see the merits of Sonic the Hedgehog."

But that disparity between user scores and critic scores is going to catch up with us, and it won't just be the critics who get bitten in the ass. If the gamers don't have any critics to trust, they're going to stop buying games the day they come out. And since the industry puts so much emphasis on launch day box sales, that's going to look an awful lot like a crash to the people in charge.